Loss of Expected Profit

Loss of Expected Profit

in civil law, a loss incurred by a hirer if the contracting party fails to perform an obligation, performs it improperly, or causes noncontractual harm. In such cases, the contracting party must compensate the hirer for the resulting loss.

In accordance with Soviet law, the expected profit is the income that the hirer would have received if the contractor had fulfilled his obligation. The loss is subject to compensation except in certain cases provided by law. Thus, if a socialist organization, having assumed by contract an obligation to transfer property for gratuitous use, fails to provide the property, the organization must, in accordance with Article 344 of the Civil Code of the RSFSR, compensate the hirer for expenditures made in expectation of receiving the property or for related damage or loss of the hirer’s own property. For example, a socialist organization must reimburse a hirer for money spent to equip the hirer’s premises for machinery that the organization was obligated to deliver in accordance with a contract for gratuitous use of property.

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